Qualified salaries include expenses from the eligible employer's qualifying health plan that can be appropriately allocated to salaries. The ERTC is a refundable credit that companies can apply for on qualified salaries, including certain health insurance costs, paid to employees. The ERTC is available for companies of all sizes: there is no limit to the number of employees, although it is easier for small businesses to take advantage of it. Consequently, it is important to ensure that all eligible expenses, including non-payroll costs, such as utility, rent and operating expenses, to name a few, are included in PPP loan forgiveness applications to maximize the qualified salaries available to ERTC.
The IRS has also clarified that tips can be considered qualified wages for ERTC purposes, as long as they are Medicare salaries. Basically, if they are considered to be majority owners, their salaries are not ERTC-qualified salaries. While the Employee Retention Tax Credit (ERTC) program has officially expired, this does not affect a company's ability to apply for the ERTC retroactively. If you haven't yet applied for PPP loan forgiveness, consider applying for non-payroll expenses to maximize the salary you can use to apply for your ERTC.
The AICPA has stated that formal guidance is needed to understand how the IRS will apply the ERTC to landlords and their spouses. In addition, since the beginning of the ERTC program, several laws have come into effect that affect the way in which credit can be applied for. In addition, most of the notice reiterates the ERTC FAQs that were previously posted on the IRS website. A company may be eligible for ERTC under this provision, even if its revenues increased during the corresponding quarter.
Consequently, if previously salaries were wrongly classified as qualified wages for the ERTC, then amendments to 941 would be necessary to correct any unintentional errors.
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